Open Source Business Models: let’s start from the production of code

I would like to join the the ongoing discussion about open source software business models driven by Matthew Aslett who in turn was answering Savio Rodrigues‘s post on how to fix the ‘broken’ open source business model.

ProductionProduction by The Library of Congress

Before getting into the conversation, it is useful to recap what is an open source business model. Researchers, tech writers and consultants often taxonomize open source business models mentioning just the license scheme and what is sold the most. The result is that the vast majority of the open source firms seem to use just the same business model. Under this approach we might consider firms like Zenoss and GroundWork as if they were applying the same business model – i.e. differentiating on features their commercial and community products. But the two firms are using different open source production models, resulting in different core capabilities and configuration of activities (2 of the 9 building blocks used to describe a business model).
Zenoss develops its own platform, building it with the classical corporate production model, where all stages of software production are carried on within the organization using some open source plumbing. GroundWork has adopted an hybrid production model, relying on existing projects and contribute directly to them, and also indirectly spending effort coordinating some inter-projects collaborations.

Differences like these can affect what customers choose to buy, eventually ending to better determine your customer segment. For example customers interested in Nagios, could be not happy with an open source project supported by a services organization. Instead they might prefer a software company offering subscriptions services along with a corporate community support. Others in order to avoid lock-in risk might want to buy only from a community driven open source firm, privileging one of the ISVs delivering services on Nagios.

Open source customers are more right than others.

Business models are a simplified representation of how a company makes business, and elements to describe it have to be choosen carefully.

Technorati Tags: commercial open source, Zenoss, Hyperic Nagios, Groundwork, subscription services

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4 thoughts on “Open Source Business Models: let’s start from the production of code

  1. I read the old “debate”, and also their position paper on open source. They do not distinguish between corporate and hybrid production models, so that open source is always about communities in their perspective. Moreover in their opinion open source is always about coordinating volunteers, while just open source network management projects like MRTG or RRDTool are developed by a single developer.

    Their theorem is pretty clear:

    PacketTrap’s position that IT departments should be skeptical of POSS vendors (i.e. Hyperic, GroundWorkOpen)because shareholder profit motive overrides community and, for this reason, the long term viability of these companies is questionable

    On the contrary Tobias Oetiker seems to be happy with GroundWork sponsorship, and I believe that asking Cacti guys and others we might get similar feedback.

    Talking about long term viability, I am afraid that small proprietary vendors are a much more risky bet, though.

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